In the suburbs, Bedford has the highest overall vacancy rate at 32.97 per cent, followed by Burnside/City of Lakes at 16.54 per cent.

Turner Drake attributed the vacancy rate increases mainly to the large amount of new office space entering the market, especially in Bedford, Burnside/City of Lakes and downtown Halifax.

Turner Drake said the relatively healthy downtown Halifax market is in jeopardy in the year ahead as new supply comes on the market.

“The overall vacancy rate in this sub-market is held in check only by the 6.20 per cent Class B vacancy rate. Class A and Class C are at 15.96 per cent and 18.19 per cent, respectively.”

Turner Drake suggested tenants for the new buildings are likely to come from older Class A stock, or from Class B space.

“Class C space will be removed from the market and repurposed,” Baird Allen said, pointing to the redevelopment of the old Roy Building in downtown Halifax from Class C office space to residential space as an example.

Class A net rental rates dropped a cent to $17.46 per square foot, while Class B rates increased 3.29 per cent to $13.51 per square foot, and Class C rates increased 2.12 per cent to $11.07 per square foot.

Baird Allen said the oversupply of office space could bring downward pressure on rents as landlords compete for tenants, but this could be tempered if Class C space is removed from the market and vacancy rates drop.